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Net Neutrality and the Risk to the Midwest

Clay & Milk is reaching out to several contributing writers in the ongoing debate over net neutrality. If you’re interested in being a contributor or have a differing opinion on a piece of commentary we run, please contact us here.

The internet is more than a collection of cat gifs, Netflix series and friend requests. It’s access to an infinite number of resources, connections and programs—many of which drive our economy. More importantly, it’s a world where all ideas, links and pages are created equal. Net neutrality ensures that this access be delivered on fair and level playing ground to all.

Unfortunately, it also represents an untapped oil field to Internet Service Providers (ISPs, think Comcast, AT&T, Time Warner, etc.), who will have strong pressure from leadership and shareholders to maximize profit, no matter the cost to the rest of us. To avoid this, former FCC Chairman Wheeler classified the Internet as a common carrier in 2015. The ruling provided clear rules and protections that enshrined the Internet as open and free; thus, preventing ISPs from mass-f*ckery. Recently, however, the new administration and FCC Chairman, Ajit Pai, has put forth a new policy that would revert the 2015 ruling and once again jeopardize net neutrality’s very existence, creating billions of dollars in opportunity for what is otherwise an oligopoly of ISPs and screwing everyone else over in the process.

This is the third round of an ongoing war to keep the Internet open and free. Pepper in special interests, the complicated legal jargon and uninformed policymakers, and the fight has begun to feel futile and exhausting.

As Midwest entrepreneurs, we cannot give up. We stand to risk the most. For all our strengths, it’s important to acknowledge that there are real business challenges to building in the Midwest. The dismantling of net neutrality rules could cause needless irreparably harm to our ecosystem.

We rely on the Internet for awareness

For well over 20 years, a free and open Internet has provided products, services and ideas, a marketplace to compete on merit. If you had a connection (which you purchased as a customer or helped install as a taxpayer), your content flowed indiscriminately from one computer to another.

Product Hunt, Facebook, Buzzfeed, Etsy, all of these platforms have created new distribution channels that, with a little hard work and creativity, made geography irrelevant. We—not the ISPs—pick winners and losers.

Without firm net neutrality rules, we see a different scenario unfold, one where preference for different products and service may be given to the highest bidder—or worse, ISPs’ own product. Like when AT&T, Verizon and T-Mobile blocked Google’s mobile payment platform. It was later found out that the ISPs were planning to announce their own competing platform later that year. There’s been numerous instances of how ISPs permanently or temporarily block applications to suit their interests and there’s no evidence that an ISP, like Comcast, would stop now.

We rely on the Internet for growth and investment

A fair and open Internet has spawned a virtuous cycle of innovation where one breakthrough begets another begets another. This has led to some of history’s greatest advancements, many of which are now an integral part of our economic growth. This, in no small part, was fueled not only by net neutrality but by venture capital investing in the smallest, even poorest ideas.

There are examples of areas where investment chilled or were avoided. Barbara Van Schewick discusses many of these examples in her 2015 article in The Atlantic how mobile Internet VC investment suffered. She also quotes USV investor, Fred Wilson.

“Many VCs such as our firm would not invest in the mobile Internet when it was controlled by carriers who set the rules, picked winners, and used predatory tactics to control their networks. Once Apple opened up competition with the iPhone and the app store, many firms changed their approach, including our firm.” – Fred Wilson, USV

Let’s face it, raising capital anywhere is hard, but being in the risk averse Midwest doesn’t make it any easier. New restrictions on data and content could kill entire industries before they start. Meanwhile, ISPs—who argue they, too, will experience a chilling effect when it comes to their own investments—have continued to admit how existing net neutrality regulations have NOT reduced their infrastructure investments.

We rely on the Internet to get to market

Eli Pariser, founder of Upworthy, said it best during a business roundtable I attended with former Chairman Wheeler that I’ll never forget:

“I’m very thankful that one of the tests I *didn’t* have to pass was the Knows How To Negotiate A Complex Deal With A Large Telecommunications Conglomerate Test. I’m not sure many of us could have passed that test in the early days of our companies. To me, that’s what this meeting is about: We want to make sure that you don’t have to have a degree in telecom law to start the next Facebook or YouTube.”

Creating a product, securing investment and getting that first sale is hard enough as it is. The last thing you want to do is to negotiate fair and sustainable terms with a telecom conglomerate. By allowing discrimination or paid prioritization (i.e. the ability for access providers to pick and choose the costs or terms of access), we create a new hurdle in the founding process and possibly inhibit the next innovation from coming to fruition.

For years, the Internet has been the great equalizer, allowing startups like Dwolla, Hudl, and many others a new and fair platform for distribution. Let’s not ruin it now.

Jordan Lampe works in Communications and Policy Affairs at Dwolla, a technology company in Des Moines, Iowa.